Share article

Print article

President Donald Trump's penchant to act first, ask later was on full display recently when he became the first president in American history to fire a member of the Federal Reserve Board.

Trump's axing of federal employees is nothing new - thousands have been terminated, including the heads of agencies that, like the Federal Reserve, are designed to be insulated from presidential control.

But in removing Lisa Cook, Trump has entered into a morass of legal questions and challenged long-standing beliefs about the power of the president to control the U.S. economy.

Trump's action, if upheld by courts, would upend the Fed's century-long practice of formulating the nation's monetary policy free from political pressure. It also could affect the budget of every American household, with the cost of goods and services influenced by political ideology more than financial expertise.

As a scholar of the American courts, I believe that, depending upon how courts resolve the case, it could also mark a significant shift in the ability of the judicial branch to check executive power.

The dispute with Cook reached the public on Aug. 20, 2025, when Trump-appointed director of the Federal Finance Housing Agency Bill Pulte announced on social media that he had made a criminal referral to the Department of Justice about potential mortgage fraud by Cook. The DOJ subsequently opened an official investigation.

After Pulte's announcement, Trump posted, "Cook must resign, now!!!" She refused and was officially fired by Trump five days later.

Cook then filed suit in federal court on Aug. 28, asking U.S. District Judge Jia Cobb to issue an emergency order blocking her removal. The litigation is ongoing.

Among the multitude of cases about Trump's ability to fire employees of federal agencies, this one is different - because the agency is different.

Created by Congress in 1913 after a series of banking panics, the Federal Reserve is charged with managing the nation's economy. It acts as the national bank, monitors the health of other financial institutions, and, most critically, develops monetary policy, which includes setting interest rates, the primary tool with which it manages inflation and ensures long-term economic growth and stability.

Precisely because of the Fed's power, presidents have often tried to influence it. Sharp criticism of its members is nothing new. Trump has an ongoing and very public fight with the chair of the Fed board, Jerome Powell, about interest rates.

But a president actually firing a board member is something else entirely.

The Fed is just one of dozens of what are termed "independent agencies." These are part of the executive branch but designed by Congress to operate insulated from the president's preferences and pressure. Over time, precisely because it is so powerful, the Fed's ability to act free from the president has become particularly sacrosanct.

The primary mechanisms through which Congress ensures agency independence are "removal provisions," statutory directives that define when and why the president can fire agency leadership. The Federal Reserve Act, the law that creates the Fed and sets out its structure and mission, provides that members of the board, called "Governors," serve 14-year terms, "unless sooner removed for cause by the President."

"For cause" may sound familiar because its appearance in a different law also recently triggered litigation. That happened when Trump removed the heads of two other independent agencies, Gwynne Wilcox of the National Labor Relations Board and Cathy Harris of the Merit Systems Protection Board. The Supreme Court decided in April that the restriction on the president's ability to fire those two independent agency heads violated Article 2 of the Constitution.

Read more: Supreme Court ignores precedent instead of overruling it in allowing president to fire officials whom Congress tried to make independent

In that same opinion, however, the court took pains to specify that its ruling did not apply to the Federal Reserve Board. Calling the Fed a "uniquely structured, quasi-private agency" with a "distinct historical tradition," the majority signaled to Trump that booting members off the Federal Reserve Board was a no-go.

When he fired Cook, Trump flouted this directive. A legal battle was inevitable.

The case is complex and involves questions about whether Cook's termination violates a congressional statute and the due process clause of the U.S. Constitution.

Notably, the parties are not arguing about the constitutionality of the removal provision itself, as they were in the Wilcox case. Instead, the dispute centers primarily around the meaning of "for cause" - that is, what reasons can legally justify firing a board governor. Unlike other statutes, which use additional terms such as "inefficiency, neglect or malfeasance of duty while in office," the Federal Reserve Act provides no further guidance.

Trump argues that the - alleged - mortgage fraud is sufficient "cause" to remove Cook, particularly from an agency charged with managing the nation's finances. Cook claims that mere allegations about private conduct before she was appointed to the board cannot justify her termination, particularly when those allegations appear to be a pretext for a political disagreement.

But lurking in the background of this seemingly picayune fight over a single word in a 111-year-old statute are fundamental questions about separation of powers, checks and balances, and which branch of government determines the law.

Trump's fuller argument is actually quite bold.

As he is doing in other lawsuits, the president is asserting that he - and he alone - gets to determine the meaning of "cause." The term, his lawyers write, is "capacious" and its meaning is entirely vested by Congress in the president. No court can second-guess his judgment.

The claim is striking and seems to fly in the face of the country's system of checks and balances. In addition, if the branch of government charged with carrying out the law - the executive branch - also gets to define it, separation of powers also appears to be left by the wayside.

Cook counters that judicial review of termination decisions is critical.

If courts abandon their responsibility here, she argues, they will obliterate the independence of the Federal Reserve and subject the national economy to the short-term whims of a president rather than the long-term vision of economic experts.

And given the clear and continued acquiescence of Congress to this president's broad assertions of power, they would also remove what, at least until the next presidential election, may be the last remaining check on executive power.

The case will likely reach the Supreme Court this fall, and the outcome is hard to predict. Trump has benefited from a string of victories there issued by a conservative majority that believes strongly in executive power and judicial deference to the president.

At the same time, it will be difficult to ignore the sentiments about the independence of the Fed that those same conservative justices expressed in the Wilcox case and the potential economic consequences a ruling for Trump might generate.

The court's ultimate decision may actually depend upon what role it wants to play in the country's fraying democratic system. The legendary Chief Justice John Marshall famously wrote in 1803 that it is "emphatically the province and duty of the judiciary department to say what the law is," a sentiment inscribed on the marble wall of the Supreme Court building in D.C.

This case provides the opportunity to see whether the maxim still holds true.